The real property continues to maintain its value and be a source of a good investment for many people. However, problems may arise during your real estate ownership that can jeopardize your financial investment and your property interests. Below, we discuss the five most common real estate disputes and give you practical information on how to avoid them.
Disputes Involving Builders and Developers
If you are building real property or going through renovations with the intent to lease the space to commercial or residential renters, problems may arise with your builders and developers. Some of these disputes may involve:
- Unexpected delays
- Variations in materials
- Unexpected increases in the cost
- Problems with workmanship
To avoid these issues, you should put all agreements with builders, developers, and contractors in writing. Additionally, you should require any changes to be in writing and signed by you so that you do not wind up with unexpected expenses. You may also want to structure payments to contractors based on completed work so that there is an ongoing incentive for the builder or contractor to finish the work promptly.
You should also only work with builders and contractors that have a good reputation in the community and do not have complaints about them.
A property’s title is very important because it is proof of legal ownership and the owner’s rights. If there are issues with the title or a chain in the title, there may be a cloud on the title that negatively impacts the value of your property. In some situations, title issues may expose you to unnecessary liability or legal claims of others.
Title issues can be avoided when you use a knowledgeable real estate attorney who can conduct research on the title, review all documents related to the title, and provide you with title insurance if any issues do arise.
Property rights can become more complicated when a person receives property through a will or intestate law. Aggrieved family members may challenge the veracity of the will, and legal proceedings can take years to resolve. During this time, ownership of the real property can be in dispute.
These potential problems may be avoided by carefully following laws related to creating a valid will. Some people may prefer to place their ownership of property into a trust to avoid probate law and judicial oversight completely. If you are purchasing inherited property or property through an estate sale, be especially careful about only buying a property where there is a clear chain of title.
Lack of Occupancy Certificate
Another potential issue can arise when a developer says it is finished with a project but buyers cannot move into the property because there is no occupancy certificate. This can cause investors to lose money due to this unnecessary delay right when they are expecting to earn back their investment.
This potential real estate issue can be avoided by ensuring regular inspections are completed and the progress is approved by the local authorities. You can also condition final payment on the developer obtaining an occupancy certificate.
Misuse of Property
Other disputes can arise when a person rents residential or commercial property to someone who uses it for an unapproved use. For example, a residential tenant may use the property to run a business out of it, or commercial property may be used in a way that is not approved by local zoning laws.
These issues may be avoided by drafting clear lease provisions related to how the property can be used and including penalties that the tenant agrees to beforehand if they disobey these rules.